"Barbasco first became a plant of interest in the late 1940s when it substituted another dioscorea, cabeza de negro, as the ideal raw material for obtaining desired chemical compounds."
This means that Barbasco was substituted for Dioscorea when Dioscorea may not have been available or it was overpriced. Not necessarily that it was as good as the one it substituted and there was also a chance the original product may be used again in the future or that the substitution was a correct one to do and may in fact be an illegal act. (A good example of this is the Chinese milk scandal where one product was substituted for another but not a replacement of the original product)

So this is where it is said to be substituted for another, and with the next you provided it looks like it may have been this, as there appears to be a senate hearing about this substitution, therefore it (the substitution) may have had serious side effects, just like the Chinese scandal.

It is a replacement product, if it is within the parameters of the law and it is approved to be a replacement product.

In the text you provided, the correct term is "substitute" and not "replacement or when it replaced another"

"Barbasco first became a plant of interest in the late 1940s when it displaced another dioscorea, cabeza de negro, as the ideal raw material for obtaining desired chemical compounds."

Displace: to shift from its place, oust, take the place of, put something else in the place of.

Not saying there's anything wrong with replaced, but perhaps this works as well?

"Barbasco first became a plant of interest in the late 1940s when it substituted another dioscorea, cabeza de negro, as the ideal raw material for obtaining desired chemical compounds."

There can only be one ideal raw material; therefore this was a replacement, not a substitution.